2013 (12) TMI 1323 - AT - Service Tax

Demand of service tax - Business Auxiliary Service - Mining and grading of iron ore - Held that - A given activity can be classified only under one Head of taxable service and such classification of taxable service is a part of the scheme of the levy. Further, we have found prima facie case for the appellant inasmuch as they have been paying service tax in respect of the same activity from 1-6-2007 (the date with effect from which mining service became taxable) under the Head, Mining Service after obtaining the requisite registration from the department. Apparently Mining Service has been accepted as the appropriate service rendered by the appellant. The fact that they have been paying service tax under this category ever since it became a taxable service under this category shows that the appellant did not want to hide anything from the department or to evade tax. Prima facie, the extended period of limitation was invoked without any basis - Following decision of CCE, Hyderabad v. Vijay Leasing Company 2010 (12) TMI 782 - CESTAT, BANGALORE - Stay granted.

Summary

Issues:
Demand of service tax and education cess under Business Auxiliary Service (BAS) for the period from December 2005 to March 2007, invoking the extended period of limitation, penalties imposed on the appellant, confusion regarding tax liability, classification of taxable service under BAS or Mining Service, waiver and stay sought by the appellant.

Detailed Analysis:

1. The adjudicating authority demanded service tax and education cess from the appellant under the Head Business Auxiliary Service (BAS) for the period from December 2005 to March 2007, invoking the extended period of limitation. Penalties were also imposed on the appellant. The appellant sought waiver and stay in respect of these dues. The demand was related to the activity of mining and grading of iron ore undertaken by the appellant during the mentioned period.

2. The appellant had been paying service tax under the Head Mining Service from 1-6-2007 after obtaining registration from the department for the same activity. The show-cause notice was issued based on an audit conducted by the department's auditors in February 2008. The auditors initially viewed the activity as falling under "site formation," but the department demanded service tax under BAS in the notice. The appellant argued that this confusion in the department regarding the tax liability indicated that the extended period of limitation should not have been invoked. The tribunal agreed with the appellant, stating that a given activity can only be classified under one taxable service head, and prima facie, the appellant had been paying tax appropriately under Mining Service from 1-6-2007.

3. The appellant cited a decision in the case of CCE, Hyderabad v. Vijay Leasing Company, where a similar activity was held to constitute "Mining Service." This supported the appellant's claim regarding the classification of the service provided.

4. Considering the arguments and evidence presented, the tribunal ruled in favor of the appellant. It granted waiver of pre-deposit and stay of recovery in respect of the adjudged dues, indicating that the appellant's payment of service tax under Mining Service from 1-6-2007 was appropriate and the extended period of limitation was invoked without a valid basis.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT BANGALORE highlights the issues involved, the arguments presented by the appellant, the confusion regarding tax liability, the classification of taxable service, and the final decision granting waiver and stay in favor of the appellant based on the evidence and legal precedents cited.